Jurors weigh factors that could affect 5 defendants' fate

Their interpretation of the calculations they heard could greatly alter the eventual sentences for a former Enron finance executive and four ex-Merrill Lynch bankers in the Enron Nigerian barge trial.

U.S. District Judge Ewing Werlein asked the jurors to return today to hear the lawyers argue about such things as how important a role each defendant played and how much was lost in the fraud. That would be either $43 million according to the government expert or $120,000 according to the defense witness.

The jury will simply advise Werlein, who will sentence the five men in March, after the regular presentencing investigation is conducted.

Werlein held this precautionary sentencing hearing because the U.S. Supreme Court has not made clear whether it will require something like this in the near future.

A lot could be at stake based on what the jury decides about these factors from the federal sentencing guidelines.

The amount lost in a fraud like this can alter the sentencing range. If it's a $43 million fraud, the men could get something closer to 15 years in prison. If it's the negligible fraud, the men could get possibly as little as a year or two, some experts predict.

Former Dynegy executive Jamie Olis' sentence was magnified because of a determination in his case that the fraud cost $100 million. Convicted on a deal similar to the barge case, Olis is serving a 24-year sentence.

The sentences at issue here are for Dan Boyle, formerly of Enron, and ex-Merrill Lynch bankers Daniel Bayly, James A. Brown, William Fuhs and Robert Furst. The jury found the five men guilty of conspiracy and wire fraud Wednesday. Boyle and Brown also were convicted on extra charges relating to lying to authorities.

"This is a brave new world, and there aren't any rules about these hearings," said Kirby Behre, a Washington D.C.-based expert on federal sentencing guidelines.

Behre said because a prior U.S. Supreme Court raised questions about the constitutionality of the federal sentencing rules, many hearings like this have been held across the country in the last few months, especially in drug cases.

The defense attorneys in the case objected vociferously to the idea of having any sentencing hearing, especially one that was time-constrained as the judge did here. Behre said the lawyers would not want to waive any of their client's rights by agreeing to a hearing when there is no law describing how it should be properly held.

The government's witness Thursday was Anthony Saunders, chairman of the finance department at New York University, who testified on behalf of the government that Enron's sham sale of three power-generating barges to Merrill Lynch led to damages suffered by Enron shareholders of about $43.8 million.

Dan Fischel, a law professor at the University of Chicago who testified for the defense, countered that the loss was closer to $120,000 and that Saunders' methods were "inconsistent with the real world."

Saunders said he used several methods to reach his $43.8 million loss figure. He estimated that the 1 cent per share that the barge deal contributed to Enron's 1999 earnings translated to about 47 cents per share in the company's stock price of $53.50 the day after the company's financial results were announced in January 2000.

On cross-examination, David Spears, Fuhs' attorney, tried to discredit Saunders by questioning an item on his résumé that said he was a member of the nominating committee for the Nobel Prize in Economics.

He also had Saunders read from an analyst's report that claimed Enron had outgrown the valuation method Saunders used to reach his conclusions.

Fischel called Saunders' methodology flawed on several counts, saying it relied too heavily on academic models and not those used by the business community.

And on cross-examination, prosecutor Matt Friedrich tried to discredit Fischel, noting he worked with and wrote a book bolstering Michael Milken, the convicted junk-bond king.